The Animation Options Blog

There’s an old adage, which definitely runs true in Hollywood, that “Nothing happens until somebody sells something.” Nevertheless, some independent filmmakers seem to maintain an almost willful disregard for distribution. As middlemen between the filmmaker and the audience, motion picture distributors are usually viewed in the most charitable cases as a necessary evil. In my presentation of last year, “Your Grassroots Are Showing”, I myself made the case for how mobile media is revolutionizing the ability of content creators to directly engage their audiences. However, the fact remains that for theatrical motion picture releases, distributors perform a critical and complex function that remains essential to the business of filmmaking.

Of all the major participant categories in the film industry, the most important - and hopefully the most obvious - is the audience. I say “hopefully” because it is remarkable how many independent film industry professionals fail to take their potential audience into account as they proceed with the development and production of their movies (such as my hapless colleagues in the earlier blog entry “Beta Sooner Than Later”).

The second-most important participant category in the film industry is, of course, the distributor. Why? Well, in short - audiences pay to watch a producer’s film, which the distributor motivates an interest in. A good distributor is a combination salesperson, negotiator, storyteller, and most importantly - has keen instincts for matching content with consumers. Motion picture distributors address a complex array of activities such as booking venues on the theater circuit, negotiating favorable screens and film rental terms with exhibitors, staging the physical distribution of the film, and settling up with the exhibitors as the film runs its course.

The most important activity, however, is the shaping of public opinion of the film through advertising and promotion. In essence, the distributor “brands” the film, heightening audience impressions and ensuring that aggregate media buys reach a critical mass. Distributors weigh almost 75% of their interest in a film towards “campaign integrity” and only 25% towards “entertainment value”. While this ratio may raise hairs on the back of most filmmakers, it is simply a pragmatic response to the fact that a good opening weekend is the foundation upon which successive income is typically predicated.

Accordingly, independent producers would do well to pitch their films to distributors with a complete and realistic sense of the audience in mind, including demographic appeal and projected gross receipts. In order to evaluate a film as a feasible prospect, the distributor must see a potential net income-to-cost ratio of at least 2:1, once the exhibitors have taken their cut. Experienced distributors look for a hook, a “unique-yet-familiar” story line, the genre and its associated demographic, name recognition and popularity of attached talent (if any), the producer’s & director’s track records, alternate media tie-ins (such as popular books, comics and games), and attached money (if any).

Contrary to some popular advice, distributors prefer not to consider complete films, which are not usually marketable enough to warrant the investment of their time and money. While a finished film can certainly provide compelling evidence of why a distributor should consider acquiring a film, it more often than not provides compelling evidence of why they should pass… even on films they may personally like. It all comes down to salability. So one would think that before a filmmaker poured their talent and resources into a film, they would contact compatible distributors early on in development, to find out if they were interested in the filmmaker’s vision of the picture, and to get advice on marketability while the film is still being formed.

One would think… and yet so many independent film producers are content to play “craps” on the festival circuit (literally and figuratively), with the hubris that, “We’re making our movie no matter what, and we’ll tour it at the festivals until it’s sold!” Referred to in the business as “renegade pictures”, these films are produced independently on spec, and often without studio knowledge, until they hit the fests.

The Producer’s Business Handbook notes that at Sundance 2004, out of more than 2600 submissions, approximately 120 films were screened, with around a dozen subsequent distributor pickups. So the independent filmmaker who is relying on the “payoff” of this big event is generally looking at a less than a 1% chance that their film will be sold before they settle the mini-bar tab at their lodgings in Park City.

Of course, as folks are quick to point out, there are exceptions. Indeed, there are always exceptions. But exceptions are referred to as exceptions because they are exceptional. And do you really want the basis of your film’s business plan to rely upon exceptional circumstances? Especially when your skin, and that of your investors, is in the game? Production is a Pyrrhic victory without the exposure and profits associated with distribution, unless you are happy to project your film onto the back of a club in Santa Monica, to the enthusiastic honking of your family, friends and crew.

So, independent producers should ally their film early on with a compatible distributor. It is very wise for the producer to meet with studios & distributors before the film is started, in order to see if their idea is marketable. Otherwise, the producer could have a finished film that nobody wants to distribute. Studios will only deal with films that they think will make money, regardless of how impressive the film is artistically. In the best case, the filmmaker’s vision combines with the distributor’s insight to increase the odds of audience appreciation and ultimate profit.

The American Film Market, held in Santa Monica each November, is one of the key markets for developing and completed films. (Cannes is the other, but has more of a promotional focus while the business of AFM is primarily sales.) The AFM website has a great online primer for independent filmmakers on how to “work” the annual event for increased chances of success - a must read for anyone serious about their independent film.

Following are three of the major types of distributor deals. Note that it is arguably more accurate to think of the major movie studios as distribution companies that happen to also produce films, rather than as production companies that happen to also distribute films (I’ll probably get mail on this).

IN-HOUSE STUDIO PRODUCTION:

The producer provides the story, development and final delivery of the film. The studio provides development & production support, financing & business resources, and distribution resources. The producer receives a fee and perhaps some profit participation, but the studio owns the film entirely, and has creative control.

NEGATIVE PICKUP:
The producer provides the story, development, financing and final delivery of the film. The studio provides development & production support, business resources, and distribution resources. The studio receives a distribution fee and profit participation, and has distribution rights. But the producer owns the film, and has creative control (although the studio may maintain right of final cut).

DISTRIBUTION ONLY:

The producer provides a finished film. The studio provides distribution only (hence the clever title). The producer retains complete creative and distribution rights. Distribution rights are “licensed” to the studio in exchange for a licensing fee paid to the producer.

In-house studio production is often quite acceptable for producers who have the know-how to make a film, but lack the resources. However, the producer typically gives up all rights in exchange for those resources. At the other end, “distribution only” allows the producer to retain all rights, but “only” offers distribution resources in return. This is the most powerful relationship for the independent producer, but requires them to produce an entire film on their own. (Negative pickups, distribution agreements and presales can, of course, be used as collateral on bank loans for financing.)

So, to sum up: don’t disregard distribution! If the business plan for your film does not substantively address distribution early in your development cycle, you’re working like The Little Rascals: putting on a show in the barn for the troops. You want more than that, don’t you? If your goal is simply “to raise money for our film” or “to make our film”, then by all means, disregard distribution. But if your goal is to create and release your film, then start researching compatible distributors as soon as you have your internal greenlight. If you don’t know where to begin, get a copy of the 2008 Hollywood Distribution Directory. Start doing your homework as you prepare a clear-eyed and compelling distribution pitch for your film with November’s American Film Market in mind.

Do right by yourself as you work on the “show”… by addressing the “business”.

Tags: film distribution, film industry, independent filmmaking

This entry was posted on Sunday, March 16th, 2008 at 1:05 am and is filed under Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.